DRS annuity options

What’s an annuity?

An annuity is a guaranteed income plan you purchase with pre-tax money such as DCP. The money you receive from your annuity is in addition to the money that you receive from your pension.

With annuities, you take money out of market risk and use it to give yourself a monthly lifetime income. Annuities are the only investment withdrawal option that guarantee you will not outlive your account balance.

Once you set it up, an annuity doesn’t allow you to change the income amount. Once you begin receiving monthly payments, you cannot cancel the annuity.

For more info, sign up for the webinar called Purchasing an annuity or service credit.

Frequently asked questions

How much will I receive each month?

The amount you receive depends on the purchase price as well as factors like your age.
Log in to your online account and select Purchasing Annuity to create an estimate.

Will my annuity purchase be refunded if I die?

Yes. All DRS provided annuities provide a balance refund. This means if you and any named survivors die before your original purchase amount is paid out, your beneficiaries will receive the remaining amount.

How do annuities affect my taxes?

The payments you receive from DRS annuities are taxed as income. Each year you’ll receive a statement that shows the taxable amount of your annuity. You might want to consult a tax advisor when considering purchasing an annuity. DRS is not authorized to give tax advice.

Types of annuities

Plan annuities

If you’re a member of Plan 1, 2 or 3, you can purchase a Plan Annuity. With this annuity, your survivor will be the same as the one you selected for your pension payment. You can use your DCP savings to purchase this annuity in addition to other approved funding sources. If you return to work, this annuity continues.


  • Same survivor option and Cost-of-Living Adjustment as your pension
  • Balance refund – if you die before your original purchase amount is paid out, your survivors will receive the remaining amount
  • Must be purchased at the time of retirement

Purchasing service credit

You can increase your monthly pension income in retirement by purchasing up to 60 additional months of service credit. You cannot use this purchase to help qualify for early retirement or vesting into a pension plan. Customers in all DRS plans can purchase this annuity when they apply for retirement.

Thinking about returning to public service work? Because it is part of your pension payments, this annuity payment could stop if your pension does when you exceed any return to work limits your plan has. For this reason, the Plan Annuity option makes more sense for those considering making a purchase to increase their pension benefit.


  • Same survivor option and Cost-of-Living Adjustment as your pension
  • Must be purchased at time of retirement
  • You can use your DCP contributions to purchase service credit

TAP annuity

If you’re a Plan 3 member, you can purchase a TAP annuity any time after you separate from employment. The minimum purchase amount is $25,000. There is no maximum amount. It can take up to 90 days to receive your first monthly TAP Annuity payment.


  • Guaranteed annual 3% Cost-of-Living Increase
  • Survivor continued payment option, and a balance refund if you (and any survivor) die before the original purchase amount is paid out
  • You can purchase this annuity and start receiving monthly payments at ANY age. But you can only purchase it once per plan

Estimate your monthly income with the annual 3% increase using this TAP Annuity calculator.

See this TAP Annuity video (2 minutes).

Podcast episode – DCP earnings and annuities

Your DCP funds are like a large savings account. When you retire, you have a several options for how you can use that money. In this episode, we look at the options for taking money out the account. One popular choice includes purchasing an annuity that will guarantee the funds last for your lifetime.

Listen, or read the transcript.

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